China will allow a 14 month grace period to the asset management industry on the implementation of a valued added tax (VAT), following concerns that such a levy could damage the sector and generate double taxation. A Finance Ministry notice last week noted that asset managers will be levied with VAT for returns on assets under management from 1 July 2017 in place of liability to a business tax from 1 May 2016. Asset management businesses had made representations on the 21 December circular (Circular Caishui [2016] No. 140).

Although its entry in force has been postponed, uncertainties remain about its operation. For further information, please contact Paul Hale or Enrique Clemente.